Nike and Kellogg: MNE Internet Marketing Strategies

Introduction to Multinational Enterprises

A multinational enterprise (MNE) is defined as a firm that is based in and operates across two or more nations. Although they began as iconic American companies, Nike and the Kellogg Corporation now have operations all over the globe and customers in almost all of the developed world and much of the developing world. Because of the different types of products they sell, however, the ways in which they reach their customer base — particularly online — are quite distinct.

Nike's Online Marketing and Sales Strategy

The multinational company Nike uses the Internet both to advertise its products and to sell them directly. Nike markets fashion-forward sportswear that serves a functional purpose while also being notable for its style. The company is most famous for its shoes, but it also sells basketball, football, and running gear. The website features slogans like "built for speed" and "without mercy" beneath images of Nike products, stressing the company's image as a brand for serious sports enthusiasts rather than casual wearers. Even non-athletes enjoy buying into the Nike ethos of competition and triumph.

The World Wide Web allows Nike to promote its newest products and technologies, such as NikeiD. The website can be tailored in a customer-specific fashion according to the user's nationality. Visitors can select both the website language and their country of origin so that their experience meets their personal, country-specific needs. This offers a significant advantage to multinational retailers like Nike in terms of segmented marketing and actual sales. A website visitor from Brazil, for example, can read the Nike website in Portuguese and have instant access to an impulse purchase of shoes in the colors of a favorite football team.

Nike's website even allows users to custom-build their own shoes, choosing the color of every design element — from laces to the Nike swoosh to the sole. Collections of new items are immediately showcased on the website so that consumers can purchase them even before they appear in local stores. There are also sport-specific virtual showrooms that allow users to select the sport and teams most popular in their home country. This is a clear advantage for an MNE like Nike, particularly in the lucrative markets of Latin America and Europe, where football (soccer) and its stars dominate, unlike the United States, where American football and baseball lead.

Nike's Global Brand Customization and Market Expansion

Nike has made aggressive inroads into the European soccer market. As one report noted, "for the first time, Nike's share of the soccer shoe market in Europe, 35%, exceeded [German] Adidas, at 31%. Nike has achieved that fast growth in part by using the same outsize marketing tactics that made it big in the U.S. It paid the prestigious Manchester United club an unprecedented $450 million over 14 years to run its merchandising and uniform operation" (Holmes, 2004).

Through online marketing, Nike can show a different side of itself to every nationality of fan — promoting Manchester United endorsements to British audiences while using NFL stars to promote football gear in the United States. Nike has been praised for adopting a more disciplined marketing strategy in recent years, largely due to its effective use of the online format, which suits its youth-focused brand identity. The old Nike was far more instinctual: "It took a guess as to how many pairs of shoes to churn out and hoped it could cram them all onto retailers' shelves. Not anymore. Nike has overhauled its computer systems to get the right number of sneakers to more places in the world more quickly" (Holmes, 2004).

Tracking sales patterns with technology and selling online has allowed Nike to address the needs of specific markets more effectively than before — particularly important for a company that sells an image and an attitude as much as a physical product. "By methodically studying new markets, it has become a powerhouse overseas — and in new market segments that it once scorned, such as soccer and fashion" (Holmes, 2004). The data-driven approach has also improved operational efficiency: "Almost complete, it is already contributing to quicker design and manufacturing times, and fatter gross margins — 42.9% ... up from 39.9% ... Nike says that the percentage of shoes it makes without a firm order from a retailer has fallen from 30% to 3%, while the lead time for getting new sneaker styles to market has been cut to six months from nine" (Holmes, 2004).

The Internet has allowed Nike to merge fashion, athleticism, and technology, as embodied in its customized shoe technology, which lets buyers select a discipline, choose a shoe type, and personalize their design online. Buying a shoe becomes an interactive online experience rather than a mundane chore. Nike can also refine its image nation by nation, discipline by discipline, ensuring that every buyer feels the company reflects their own particular philosophy and ethos of sport.

Notably, Nike does not offer a dedicated online community message board for runners and sports fans — perhaps because of the cost and complexity of moderating such a platform, or because it believes sufficient sports-centric communities already exist online. However, the near-cultish enthusiasm for Nike products, particularly among running enthusiasts drawn to its cushioning technology, suggests that adding such a feature could drive additional traffic to the site and generate more sales.

References

Holmes, S. (2004, September 20). The new Nike. BusinessWeek. Retrieved March 3, 2011, from

Kellogg: Promotions. (2011). Homepage. Retrieved March 3, 2011, from

Nike. (2011). Homepage. Retrieved March 3, 2011, from